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How to put a 7 Billion dollars stimulus to good use!

The US Retailers won a major victory with the class action settlement of $ 7.2 Billion against Visa, MasterCard and seven other card issuers.

While this victory may sound like a bonanza for retailers and perhaps get them salivating on the amount of cash they are like to see soon, it may be worth their introspecting on how the money can be put to good use by reinvesting in the payments industry infrastructure.

The US being the first mover carries the unfortunate burden of a legacy payments infrastructure. Instead of adding the settlement money to their bottomline, it will be really worth their ploughing it back to upgrade the US payments infrastructure.

Well, the biggest investment need is in upgrading the legacy magnetic stripe based payments structure to a more secure and robust Chip & PIN (EMV) platform. Analysts have been pegging the total cost of upgrading the US to chip at around $ 7 Billion and the industry has been baulking at the cost of migration.

Also, the plethora of 'alternative payments' rushing into the market on disparate platforms and operating systems are adding to the clutter. The mess is further compounded by the rapid growth of online payments; again with no common secure platform to ensure consumer safety and merchant protection from losses.

I think the Retailers will cover themselves in glory and the banks and card schemes will also redeem themselves, if they all get together and work to rebuilding the US payments infrastructure on a latest EMV/ Chip platform that takes care of real world and online payments and across all channels including mobile payments.

The recent WTO fracas with China on the monopoly enjoyed by China Union Pay further reinforces the need for the US payments industry to come up with a really game changing re-investment that rejuvenates the domestic payments industry.

I would think that a project to 'digitise' the US payments industry will not only create a huge number of jobs but also act as a stimulus for consumers and businesses  to increase the share of electronic payments by moving away from the more expensive and cumbersome cheques and cash.

So, to modify what an ex-President of the US said "Bring the chip on"!




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